Business groups today joined calls for Sir Mervyn King, Governor of the Bank
of England, to widen the scope of measures to stimulate the economy.

The calls came after Adam Posen, who retires as a member of the Monetary Policy Committee at the end of the month urged Sir Mervyn to review the operation of the quantitative easing programmes. He was joined by Professor David Blanchflower, former MPC member who said, writing in The Independent, that the Bank had "no clue" about where the economy was heading.

Mr Posen, who moves from the MPC to head the Peterson Institute for International Economics in Washington has been regarded as a dovish monetarist member of the interest rate setting body. But in aninterview with the Financial Times he urged Sir Mervyn to abandon the "anguished religious ethics" over quantitative easing and extend the programme beyond buying government bonds and examine measures to unlock financing constraints for mortgages and small businesses.

He acknowledged the programme was "preventing things from getting much worse but that doesn't mean you couldn't have an additional or better instrument."

Mr Posen argued that central bankers were wrong to say only governments could buy private sector assets. He said: "I personally view the teeth gnashing and garment rending about what's fiscal and monetary as too much drama for too little content."

Last week the MPC issued a bleak forecast about the prospects for economic recovery. Mr Posen said the outlook could have been improved if the MPC had acted faster and more decisively.